18 February 2010
This case pertains to an assessee who is a senior citizen.
The facts of the case are as follows: The assessee owns a residential house property in a building.The assessee has signed an agreement on 29th September,2009 for demolition of her residential premises and re-construction by builder in which she would get a new flat.The process is commonly known as Redevelopment of Property. As corpus,the assessee gets Rs.10 lacs. The above sum is for the purpose of meeting the increased future maintainance expenses of her residential premises. The maintainance exps increase after the building is re-constructed with more no. of flats.However,the agreement does not specify the purpose and the language used in the agreement is that the society is getting “X” amount as corpus which will be distributed between the members in the proportion of the area held by them.
There are few issues which require clarification 1) Whether the amount received as corpus can be : a) Deposited in REC/NHAI bonds for 3 years and deduction u/s 54 can be claimed? b) A residential or commercial property can be acquired and deduction us/ 54 can be claimed? 2) Till which date the assessee is required to deposit the amount in these bonds to claim the exemption? 3) If the assessee has received Rs. 5.00 lacs during the current P.Y, then, whether the entire sum of Rs. 10 lacs will be brought to tax as income of the P.Y 2009-10 or only Rs. 5.00 lacs will be treated as income? 4) Also, the assessee needs clarification if she can use the basic exemption limit of Rs.2.40 lacs + Rs. 1.00 lac for 80C deduction and invest the balance i.e Rs.1.60 lacs in these bonds/house property (5.00 lacs-3.40 lacs) ?
1)Here I thought that the your client do not want to tax sale proceed by giving name as corpus, but income tax officer will not agree with this, hence you consider this receipt as taxable and claim deduction u/s 54. But you can not claim deduction u/s 54 for commercial property.
2) For bonds it's 6 month from the end of P.Y.
3)You have calculate capital gain on whole sum i.e. Rs.10 lacs, concessional treatment available for only when compensation received from Government.
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